By Carrie Muehling

BLOOMINGTON – The USDA surprised the grain trade somewhat on Friday by reducing corn stocks even further, despite an increase in corn production and continued poor export numbers.

“The implication was feeding during the Sept.-Oct.-Nov. quarter was well above what the USDA had factored into the balance sheet.  So, they did increase their feed residual total substantially today in the balance sheet.  That was offset quite a bit, though, by a decrease in the export forecast,” said Brian Basting, commodity research analyst with Advance Trading.

USDA boosted the total corn production number by 55 million bushels.  Ending stocks are still historically tight for corn at 602 million bushels, with continued debate over the accuracy of feed numbers and export numbers.

The soybean production number increased again by 16 million bushels, which was much higher than the expected soybean crop from last fall, but the carryout remains tight. 

“The one thing that’s weighing on soybeans is the expectation for a record crop in South America,” said Basting.

USDA increased the estimate for the Brazilian soybean crop by 1.5 million tons to a record 82.5 million tons.  The agency decreased the Argentine soybean crop by one million tons to 54 million tons.  Dry regions of South America did get some rain last week.

Friday’s reports also lowered wheat stocks as of Dec. 1 to 1.66 bil bushels, reflecting use during the fall quarter of 445 mil bushels.  That’s down eight percent from last year but still more than expected, causing to USDA lower the ending stocks forecast by 35 million bushels.  Winter wheat seedings stand at 41.8 mil acres, up one percent from last year.  Hard red winter wheat acres are down two percent and soft red winter wheat acres are up 16 percent.

Basting believes market volatility will continue as the attention will go to the supply side for South America, which will be determined over the next 60-90 days.  Traders will then watch the export demand for corn, and by March or April will begin to look at the U.S. supply.

Friday was the first time USDA reports were released at 11:00 a.m. Central time instead of 7:30 a.m. 

“From our standpoint, not a whole lot different than what it would have been at 7:30,” said Basting.

Carrie Muehling can be reached at carrie@wjbc.com.